Image: www.bluewaikiki.com

The Office of Fair Trading (OFT) has fined supermarket giants Tesco, Asda and Sainsbury’s each around £10 million have found them guilty of infringing the Competition Act 1998.

The allegations relate to the pricing of milk and cheese, with the accused parties found guilty of sharing pricing intentions through dairy processors, which resulted in price hikes in 2002 and 2003.

In total nine firms are facing penalties with Arla, Dairy Crest, McLelland, Safeway, The Cheese Company and Wisemans sharing the blame with the supermarket giants. The total fines reach nearly £50 million.

The scandal is thought to have cost consumers around £270 million as the companies forced a rise of 2 pence extra for a litre of milk and 2p extra on 100g of cheese.

Despite their involvement, food manufacturer Arla has avoided any kind of fine as it turned whistleblower, alerting the OFT to possible infringements. The fines were originally set to total £116 million but most companies were shown leniency after admitting to involvement.

Tesco, the UK’s biggest grocer, continues to deny any knowledge of the practice and will take the OFT to court if necessary.

This OFT investigation has lasted a over a number of years and featured a number of high profile mistakes. The regulator was forced to drop a large portion of the case involving butter price fixing, and they were also fined £100,000 for libel against Wm Morrison.

The price fixing investigation follows a long campaign by dairy farmers between 2001 and 2003 who demanded a higher the return on milk. Should Tesco win their appeal it could prove humiliating for the Office of Fair Trading following this lengthy process.

Do you think we pay too much at the supermarkets? Are Tesco right to appeal? Tell us in the comments section below.

The BBC report that the OFT has issued guidelines to lenders and borrowers about when their loans and other credit may, and may not be enforced. The guidelines come in the wake of OFT fears that some debtors may be misled into their ability to have debts written off.

The OFT draft guidance focuses on rules laid down by the Consumer Credit Act and draws on recent rulings by Judge Waksman at the High Court in Manchester. In his ruling the judge ruled that it was acceptable for lenders to produce reconstituted copies of original loan agreements which contain all the original information, apart from the few exceptions that the law allows (which include the signature, signature box and date of signature for the purposes of providing the borrower with information about their debts when challenged to provide a copy of an alleged debtor’s credit agreement.

The OFT believe some debtors are being misled into believing their credit agreement is unenforceable and can have debts legally written off if certain information is missing from the agreement. Debtors have typically sought to challenge their lenders to meet strict criteria as led out in the Consumer Credit Act. One such clause challenges lender to produce a ‘true copy’ of the loan agreement – ie. one that has been signed by the debtor. It is argued that if a signature, date or terms of credit aren’t present then the agreement could be deemed unlawful.

However, the judge also stated that the agreement should contain the borrower’s name and address at the time of signing, while in the case of an amended agreement the lender should provide copies of both the original and amended agreements.

While Cashzilla doesn’t advocate debt avoidance, it can’t help but feel there is a fatal flaw here in that ownership of debt can surely only be determined by the presence of a signature, otherwise it can only be implied? If a reconstituted credit agreement can be considered legal in absentia of a debtor’s true signature, what safeguards does the average person have in these times of identity theft against any enforcement action where a fraudulent credit agreement exists?

As usual the law will give the benefit of the doubt to the lender, leaving innocent peoples’ financial affairs in tatters and that’s wrong. Cashzilla wonders if the Judge and Office of Fair Trading have thought of the implications of giving Identity theft a green light?